Conflicts of Interest in Procurement
A conflict of interest exists when a person has multiple interests that could motivate them to think and act in ways that are, or might be considered by some, unethical. For example, if they have family members who work for a potential supplier or any sort of financial interest.
Other potential conflicts of interest in procurement are:
- Having a close friend or family member as a manager.
- Having a relationship with a member of staff.
- Contracting a close friend or family member to provide goods or services.
- Failure to disclose a friendship or family relationship when interviewing an individual.
- Doing paid work from a second job without the main employer’s consent. They might share privileged or confidential information.
- Accepting money from a competitor in exchange for information.
- Accepting corporate hospitality or gifts from a supplier, then selecting them for a contract.
Here are four questions you can ask to help you identify a potential conflict of interest:
- Are there financial gains?
If a spouse worked for a buyer’s supplying organisation, this would be deemed a conflict of interest.
- Are there personal relationships?
If a plumbing contract came up for renewal and the buyer gave the work to their son, this would be deemed a conflict of interest.
- Are there similar situations?
If a procurement consultant offered the same service to two similar organisations in competition with each other, this would be deemed a conflict of interest.
- Should this be disclosed?
Anything that could be deemed a conflict of interest should be disclosed. Disclosure can avoid a problematic situation.
Not all conflicts of interest stop business going ahead. If a conflict of interest is disclosed, your organisation can still allow the supplier to work with you if they are the most cost effective and the process has been handled objectively.
It is about being transparent and open so anything you do is not hidden or deemed to be underhand.
These are the five main areas in which possible conflicts of interest may occur:
- Financial: The offering of money in return for a contract.
- Materialistic: The offering of gifts or days out in return for being offered a contract.
- Prejudicial: Influencing decisions through the exercise of authority.
- Personal: Acting differently due to friendship or relationship.
- Professional: Being offered a promotion if a contract is awarded to a certain supplier.
Potential conflicts of interest must be addressed as soon as possible to make sure that no unethical behaviour takes place and the code of ethics is not breached.
Conflicts of interest are not uncommon in procurement and they are not something that a professional should be ashamed to disclose.
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